If you are new to the cryptocurrency industry and are still confused about all these terms to learn, this short article provides you with the 5 main points you need to know to differentiate a coin from a token.
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- Coins use their own blockchain and own their protocols. We can think about #Bitcoin, #Ethereum, #Solana, #Cardano, #Avalanche, #Fantom…
- Tokens do not have their own blockchain and are built on existing ones, leveraging the protocols developed by main networks (also called mainnets)
- Coins can be directly purchased on Centralised Exchanges (CEXs) and used on Decentralised Exchanges (DEXs) to acquire tokens. Some tokens can also make up their ways to a CEX but usually start their journey on a DEX
- To take it one step further, some coins can be represented as tokens on a different network. For example, #BNB peg token running on the Fantom chain. When BNB is a coin on its own blockchain, through bridge mechanisms, it can be converted from a network to another one into a token to be used on another mainnet.
- There are a lot of different tokens out there, platform tokens, security tokens, transactional tokens, utility tokens, governance tokens….
Now that you know the main differences… would you say shitcoins and memecoins are usually coins… or tokens?
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Cryptocurrency: What is the difference between Coins and Tokens? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.